Executive Summary
Henri Nestle started the Nestle Company over a century ago to provide healthy food to mothers who could not breastfeed their children. The company developed and expanded by way of mergers with other businesses that shared its vision. The founder, Henri Nestle used his name because it represented the ideals he worked for as a pharmacist. The logo also indicated the founder’s dream to feed people with healthy meals.
Apart from offering condensed milk to the infants, it also diversified its products to include adults. It started providing milk powder, biscuits, sweets, pampers, chocolate and coffee. It is these products that enhanced its presence all over Switzerland, America, Europe, and Africa.
Its presence in the Middle East brought about a product called Nescafe Arabiana, Arabic coffee. It was a result of three years of intensive research. The company wanted to launch a product that would be acceptable in the United Arab Emirates region. The brand grew to become the best product that has enabled Nestle to stamp its dominance in the area.
It has used its name recognition to provide varieties of the same product. It has also introduced another range of products that are not a beverage category. The market for coffee started centuries even before Nestle ventured into the Middle East. The people used it as a gesture of warm welcome to their visitors. The small vendors of the product did not provide innovative standards in the field. Nestle saw the opportunity and used it to advance its brand in the region.
Nestle Arabiana has improved its marketing strategies and uses them to develop in the volatile market. The company uses its immense resources to market its product and make significant sales. Nescafe Arabiana has over 80% market dominance. Therefore, it only needs to utilize its strategic positioning well to maintain its market.
Introduction
Nestle is today the world’s leading company in the provision of food and drinks. It has grown by leaps and bounds from its inception over a century ago. The company has hundreds of products. It is in over 130 countries. One of its core competencies is the desire to become innovative. Some products come in more than five varieties. Nestle Arabiana is the Arabian coffee is introduced to the Middle East. The UAE region has adapted to it, and it has become the best coffee product in the market. Its marketing strength deals with the principle of research and development. It has a market of over 80% and keeps on increasing. The market is growing and the demand to produce more is appreciable. The company has strong brand recognition and produces quality products.
Nestle Company Overview
Nestle is today the world’s leading company in its provision of food and drink products (Mirabile 2007). The products promote health, nutrition, and wellness. Nestlé’s is on a mission to provide foods and drinks that suit the desires and taste of the market. From its inception to date, Nestle has grown to have more than 100 different products in different classifications.
Purpose and Work
Nestlé started operations first in Switzerland. It was in 1866 when Anglo-Swiss Condensed Milk Company opened the first European condensed milk factory. It was in Cham, Switzerland. In 1867, a pharmacist known as Henri Nestle came up with the world’s first prepared cereals for infants. About 38 years later, the two businesses joined hands to form one company which became known as Nestle. It had its headquarters in Vevey town in Switzerland (Weiss 2011).
The first customer was a premature infant who could not take the mother’s milk or any other foodstuff from any other source. The main purpose of the pharmacist was to make a meal that was suitable for parents that could not breastfeed their children. Most of his tests majored on varieties of cow milk, sugar and cereals.
Nestlé employs about half a million workers all over the world (Kose 2007). It has opened stores in almost all countries of the world. It closes its books worldwide with millions of sales. It makes billions of dollars. It is a public listed company. Nestlé SA has subsidiaries all over the world. It has a good and strong relationship with its suppliers, especially the farmers. It builds this great relationship through strong local management teams. Nestlé also has a well established Research and Development team and manufacturing department. Its primary competitive advantage is the unmatched geographical presence all over the world (Mirabile 2007).
Health Standards
Health and nutrition provide Nestlé’s strategic direction. Customers can make healthy choices about their food and beverages. In as many other products are concerned, Nestle prides itself on the Nestle Arabiana in the Middle East. It is a healthy product with a variety of flavors. Nestle believes that good beverages must be a healthy one. It sometimes means treating the body. It provides pleasurable, tasty and nutritious products.
Corporate Value
Creating Shared Value is the best way that Nestle encompasses its vision. It uses this model to connect with society worldwide. The main thinking behind the shared value is that business does not only exist to serve the interest of the company. The company is in an environment where people are concerned. Therefore, as the company grows, so should the communities and individuals in those settlements.
Nestle has created a value chain. It would continue to foster development in its chain (Kose 2007). It has also established a competitive edge above its competitors. The company engages in actions that address social and environmental issues. The firm has established its internal strength by applying best business practices and being able to sustain its market. As a result, this helps to preserve the environment for future generations. The shared value is in three categories; nutrition, water, and rural development.
Its most important pillar is nutrition. Since inception, food and nutrition have been its business because they constitute to good health. Nestlé’s mission is to enhance the quality of life of its consumers. It does this by providing tastier and healthier food and beverage choices. It also provides services that help people improve their nutrition, health, and wellness.
It focuses on water and rural development as part of its Corporate Social Responsibility. In so doing it serves its market and considers its importance to the business. Other beneficiaries are the employees, farmers, suppliers, distributors, and communities where it operates.
The company has set the best standards to create shared value in the firm and outside. And that is what Nestle has done. It complies with international codes and norms as well as the company’s Code of Business Conduct. It also maintains the Corporate Business Principles, and Management and Leadership Principles.
Review of the Financial and Marketing Perspectives
The financial information of the company since 2008 shows the potential for growth. For instance, the market capitalization in 2008 was CHF150, 409 million. But in 2012, it came to CHF190, 038 million, of course with some fluctuations over the years. The sales dipped in 2011 but started rising again from 2012 towards 2014. The projection is that the sales and proceeds would keep growing (Kose 2007).
The company does not need to invest more money in marketing because people believe in the products of Nestle. Nescafe Arabiana has become a local product in the UAE. Marketing should only continue as a means of reminding customers and maintaining the market. It may also provide informative marketing for the new citizens entering the region. The company should invest more in Research and Development to enhance its product viability and longevity (Koch 2011).
Nescafe Arabiana from Nestle
Nestlé’s mission is “Good Food, Good Life”. It provides customers with the chance to choose among its broad range of products. The meals are for all seasons and all time. Nestle entered the Middle East over 70 years ago. It formulated its brands to suit the market. Nescafe Arabiana is the coffee that gets inspiration from centuries-old coffee culture. The preparation of the Arabic coffee requires very light roasted beans and infused with massive doses of cardamom (Al-Samadani 2013).
Nescafe Arabiana came into being as a result of three years of intense research. Nestle wanted to launch the particular Middle East product to complement the discerning local palette. Arab culture has a profound history of coffee consumption.
Arabica green coffee has Chlorogenic acid. It is one of the most powerful and effective anti-oxidants. It cleans the body and protects it from free radicals that destroy the body’s cells. Green coffee’s other benefits include weight loss, digestion, and health enhancement. It also helps the consumer improve his or her focus, memory and attention (Koch 2011). All over the world, Nescafe has become the number one coffee brand. Nescafe Arabiana is an Arabic coffee that has cardamom. It is the first of its kind and is the leading coffee product available in the UAE and its environs.
Nescafe Arabiana has set the standard as the only coffee provider in the region. It is the niche and does not have a problem with competition in this category. It has approximately 80% of the market and is the market leader. Being the best requires the company to do continuous extensive research and carry out several market surveys. It would help to build on its strengths and capabilities while improving on its weaknesses especially with the CSR. The decline of previous coffee producers was due to a lack of innovation in the industry (Koch 2011).
Marketing Strategy Tools
SWOT Analysis
Nestle Arabica has more strengths and hence possesses greater capabilities for further expansion. Its SWOT analysis indicates its strength in product development. Research and Development, distribution channels and specialty in merger acquisitions are also its strengths. It is also good in brand recognition, reputation, and consistency in quality production. Opportunities exist in the increasing market demand and ability to acquire small companies. Its CSR portrays a weakness that it can work on with time to improve its image. The primary threat is the rising cost of production.
The critical success factors are the quality product with excellent flavor, diversification, and ethical view. The only major problem that Nestle Arabica can work on is its moral values and response to customer queries. Nescafe has earned its recognition the world over because of its well-established brand, quality products and having a human face. It has employed hundreds of people from the United Arab Emirates. Some of the strategic tools for continued success would involve PESTEL (Weiss 2011).
PESTEL Analysis
PESTEL is an acronym for Political, Economic, Social, Technological, Environmental, and Legal (Rao, Rao & Sivaramakrishna 2008). It is a framework for macro-environmental factors that Nestle can use for environmental scanning. It is useful in conducting an external analysis for businesses. PESTEL analysis encourages proactive thinking in the company. The company does not just rely on habitual or instinctive reactions.
As a Multinational Corporation, Nestle has to have enough information about the country’s inflation rate, economic growth rate, and national per person capital income. It is the economic perspective of the PESTEL analysis. The information is helpful to Nestle because it gives the company an upper hand on how it conducts its business.
Nescafe Arabiana is a giant that has specialized in the food and health industry. There could have been many manufacturing companies doing the same business. But Nestle spotted the gap in the market and took charge of the entire Middle East coffee provision (Tandon 2010). The company is well-equipped financially. It is one of its greatest assets. The market in the UAE is appreciable. Companies are expanding, and the economy of these nations is growing.
Over the past decades, people have been moving to the UAE for work and business. It has become a hub of business with over 300 nationalities settling in the states. The UAE has become an expatriate destination for many people because of its excellent infrastructure. It has been one of the safest places on earth because of the peaceful coexistence of different people. It has also established a system whereby people earn a tax-free income. It is a trade and business hub. Most of the world-class companies have set their businesses in UAE (Johnson, Scholes & Whittington 2011). UAE comprises seven emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Um Al Quaiwan, Ras Al Khaimah, and Fujairah. As a result of the interconnections by road and air; the cultures have become molded up in the general culture.
It creates a ready market for Nescafe Arabiana. The right market extends to other Middle Eastern countries such as Bahrain, Qatar, and Kuwait. Nescafe has dealt with its customers so well that there is hardly any complaint. Nescafe has realized that it is not prudent to lose customers because of things that the company can correct beforehand. The company has to monitor the market to prevent any counterfeit products since it can affect its customers (Hill 2013). The score on the economy is 0.8.
Similarly, the political aspect is equally important. The company has a perfect working relationship with the host nations. Although the market is volatile and, nations keep changing rules Nescafe Arabica has adapted to the market demands. The UAE has one currency that it uses across the seven Emirates. All seven Emirates have managed to stabilize the region for the prosperity of business. They have not had severe cases of penalizing foreign countries.
They help to promote business by setting up laws that prevent illegal dealings. The company has developed a marketing campaign in all the emirates that promote its products. Nestle depends on political considerations (Tandon 2010). Government laws and regulations in accounting standards, taxation requirements, including tax rate changes have affected the business environment. New tax laws and revised tax law interpretations frequently affect Nestle’s business. The score on the political perspective is 0.69.
Socially, Nestle has helped to create jobs for the citizens of the UAE. It has caused a social adjustment in society (Cadogan 2009a, p. 275). It has hired marketers, researchers, and has enhanced the livelihood of many other employees. It also has internal promotions where the workers can advance their career mobility within the company. Nescafe Arabiana has empowered coffee farmers with training on how to produce quality coffee beans. It also gives them subsidies. It has also created a working relationship with its suppliers. The leadership should start promotional activities for customer awareness. It should also continue with the staff motivational programs (Head 2013).
Arabic coffee has always been an Arab symbol of generosity and hospitality. It became a daily drink in the region. Coffee connects the people with their heritage and generosity. Nescafe Arabiana came in to maintain the history and authenticity of Arabic coffee. It made it easy and quick to prepare. The flavor and aroma remained the same. Nescafe Arabiana organizes for social gatherings with customers to share ideas and inform them about their products and varieties (Mukherjee 2010). The company caters to the expenses of all the events it organizes.
Nestle has developed effective strategies to meet different lifestyle consumer behavior. The company remains entirely dependent on consumer lifestyle and attitude. The company needs to study consumer behavior so that it can provide the best products and services. Nestle considers the culture of the UAE region. On the social perspective, Nestle Arabica scores 0.9.
Nestle boasts of technological advancement in its field of production. It has invested a lot of money in Research and Development to promote its products. It has been evolving ever since its foundation in the 19th century. The company has the latest machinery and equipment for manufacturing and processing its products. It has a well established online setup that allows customers to interact with the staff. Customers can also place their orders online (Hill 2013). The well established online trade would be sufficient for the business if the company continues to innovate along the way (Cadogan 2009b, p. 360).
Technology is so volatile that each day there is a new way of doing things. Nestle has and would always remain ahead in product innovation and development. The new marketing techniques through the internet and e-commerce are now bringing great rewards to the company. It uses technology to record sales, orders, customers, and employees. The product scores 0.9 because of its creative innovation.
The legal perspective goes hand in hand with the legislative requirements. The company is a Multinational Corporation. It adheres to the international standards of corporations. Being a publicly listed company, its books of account are open to the public for analysis. It has fully complied with the UAE’s legal, legislative requirements. It has all the rights to trade in the region. It is a strength that enables it to market its products and business in the area. It has good relations with the area’s legal authorities and regulatory bodies. It adheres to formulated policies and reviews of the same.
The UAE is one of the regions in the world where adherence to policy is supreme. It also has advertising standards and consumer protection standards. Nestle remains one of the biggest companies that is truthful, honest and decent in its scope of work. It adheres to the health and safety law and has provided its members with free legal help scheme. Nestle Arabiana scores 0.5 from the legal perspective.
Nestle has ensured that it adheres to environmental concerns. Its product content is superb. Nescafe Arabiana’s packaging adheres to the safety of the environment. The ingredients of the coffee are natural and help to promote a healthy society (Evans 2013). Nestle knows that to succeed it has to respect the environment. It would, therefore, continue with its commitment to carry out environmentally sound business practices throughout the world. It would also seek to preserve natural resources and save energy as it has always done. Nestle scores 0.8 because it is concerned about a healthy lifestyle.
The Pyramid of Corporate Social Responsibility
Basing on the previously examined PESTEL Analysis, Nestle Arabica has done its best to shape the future of the company. The Pyramid of Corporate Social Responsibility requires the organization to honor the philanthropic, ethical, legal, and economic responsibilities. The company has had a good social relationship with the host nations and citizens. It organizes meetings with the staff to ensure that they all feel safe and happy to work for the company (Mukherjee 2010).
On many occasions, it has sponsored several social events like sports and other amenities. It has also contributed to ethically marketing its products. The packaging and sales channels are well advanced. However, it has also suffered some setbacks. For instance, there was reported food contamination in some areas, and the company managed to solve the problem quickly. The good news is that Nestle Arabiana has maintained its performance as the best coffee ever in the region. It is because of the ability to do research and development that it continually develops competitive flavors (Mirabile 2007).
Conclusion
Nestle Arabica and Nestle Company have lived up to their commitments to environmental, social and economic sustainability. They have established business practices that are at the core of operations. When Nestle launched the product in UAE, the aim was not just to add another product to the already existing ones. The company sought to become the best provider of a quality product and brand that is incomparable to any other. As a result, it became the only product that citizens could choose first if given the chance to choose. Nescafe Arabiana is in every corner of the UAE.
The company’s resources are at the disposal for marketing and promotion purposes. It has also adapted quickly to the Middle Eastern culture. Research and Development have been the company’s essential capabilities. It has also worked tirelessly to deliver better financial results for the shareholders. The company has improved working conditions for suppliers and workers. It is also working on the environmental practices that would benefit the planet. Product enhancement has been at the core of its strategy to meet the specific needs of customers.
It engages in leadership training and promotion of leadership attributes. It continuously trains and educates its workers and people outside the company. One of the main reasons is to enhance technology with lower environmental degradation. The company boasts itself as one of the founding members of the UN Global Compact Lead. It is for corporate sustainability leadership.
References
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Appendices
Value Creation
